Four days, $245 million: How Waymo v. Uber came to an end

It’s rare for federal Judge William Alsup to
be late to the bench in San Francisco’s District Court. Known for his
punctuality, he opened the previous four days of the Waymo v. Uber trial
promptly at 7:30 a.m. Yet on Friday, he still hadn’t arrived by 7:48
a.m.

Moments later, his black robe flowing around him, Alsup entered the court and made an announcement.

“Ladies and gentlemen, we are going to begin things slightly differently this morning,” he said.

And
then Alsup told the courtroom’s lawyers, Uber and Waymo executives and
handful of reporters — including me — that Waymo attorney Charles
Verhoeven would address the court.

“We’ve reached a settlement this morning,” Verhoeven said.

A collective gasp echoed throughout the room.

The case had been expected to last at least three weeks.

Under their agreement, Waymo gets 0.34 percent of Uber’s equity,
worth about $245 million given Uber’s estimated valuation of $72
billion. Uber also agreed to not incorporate Waymo’s confidential
information into hardware and software used in its self-driving cars.
Waymo had been seeking $1.8 billion in damages.

The surprise settlement brings to a close one of the highest profile court battles in Silicon Valley history, pitting Waymo — the self-driving car spinoff of Google’s parent company, Alphabet — against Uber, the world’s most valuable startup.

The case centered on 14,000 “highly confidential” files that Google’s former star engineer Anthony Levandowski allegedly downloaded before quitting in January 2016 to form his own self-driving truck company, Otto. Uber acquired Otto seven months later. Waymo claims its trade secrets found their way into Uber’s self-driving cars.

Over the previous four days of testimony, roughly two dozen witnesses had given details on everything from what a Drobo 5d hard drive is — an especially large backup drive the size of a shoebox — to Uber’s aggressive business culture. Meeting notes quoted former Uber CEO Travis Kalanick saying, “The golden time is over. It’s war time” regarding Uber’s rivalry with Google, as well as a wish list that read: “source, all of their data, Tagging, road map, pound of flesh, IP.”

Less than 10 minutes after Verhoeven’s bombshell announcement, Alsup thanked the jury and told them they were free to leave.

“It’s rare that a case settles in midstream,” he said. But now, “this case is ancient history.”

Behind the settlement

Negotiations may have begun even before the trial started, CNBC reports, citing people familiar with the talks.

Then in a Monday night telephone meeting, Uber’s board rejected Waymo’s proposed settlement of almost $500 million, according to a report in the San Francisco Chronicle. Uber’s directors would agree to a settlement for less money and an acknowledgment that Uber hadn’t stolen anything, the Chronicle reported, citing a person familiar with the discussions.

Uber responded
Thursday with its offer of about $245 million, according to a person
familiar with the negotiations, who asked not to be identified by CNET
because the discussions were confidential.

“This is a huge settlement,” said intellectual property attorney Michael Brophy, who’s with the firm Withers Bergman. “But it seems appropriate for the possibilities of this game-changing technology.” He said the same amount awarded by a jury would have ranked among the largest verdicts in a trade secrets case.

Uber also agreed not to incorporate any of Waymo’s confidential
information into its hardware or software. Waymo has said all along that
the primary goal of its lawsuit was making sure Uber wouldn’t use its
proprietary technology.

“We have reached an agreement with Uber
that we believe will protect Waymo’s intellectual property now and into
the future,” a Waymo spokesman said in a statement. “We are committed to
working with Uber to make sure that each company develops its own
technology.”

Why now?

The settlement is a win for new Uber CEO Dara Khosrowshahi, who aims to put a cleaner face on a company known for its overly aggressive, “bro” culture. The agreement halts the dirty laundry being aired in court even as it allows Uber to continue building its own self-driving car program.

“My job as Uber’s CEO is to set the course for the
future of the company: innovating and growing responsibly, as well as
acknowledging and correcting mistakes of the past,” Khosrowshahi said in
a statement. “I’ve told Alphabet that the incredible people at [Uber’s
self-driving program] are focused on ensuring that our development
represents the very best of Uber’s innovation and experience in
self-driving technology.”

Khosrowshahi also said Uber should have handled Otto’s acquisition differently.

“The
prospect that a couple of Waymo employees may have inappropriately
solicited others to join Otto, and that they may have potentially left
with Google files in their possession, in retrospect, raised some hard
questions,” Khosrowshahi said. But, “we do not believe that any trade
secrets made their way from Waymo to Uber.”

Brophy, the
intellectual property attorney, said it’s hard to know after only four
days of testimony which side would’ve won because a lot of the
information the jury saw was closed to the public.

“Clearly [Waymo] recognized there was some risk they weren’t going to
win,” he said. And “Uber’s new management wanted this case to go away.”

“Waymo
certainly had a lot of things to point to that were unusual,” Brophy
continued. But, “there wasn’t a smoking gun showing exactly that Uber
used trade secrets in that giant batch of materials.”